China pumps £50bn into its banks in bid to halt slowdown

 
Tim Wallace
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CHINA’S central bank is believed to have injected more liquidity into the country’s banks yesterday in an effort to support lending.

The People’s Bank of China’s (PBOC) hopes to stop GDP growth falling below seven per cent with the 500bn renminbi (£49.8bn) move.

The measures have not been officially announced, but have been reported by local traders, analysts and media.

Asian markets pushed upwards on the news, providing positive impetus across the day.

The Shanghai Shenzhen CSI 300 index increase 0.53 per cent, and the Hong Kong Hang Seng Index rose by one per cent on the day.

The PBOC’s move comes ahead of today’s liquidity boost from the European Central Bank (ECB).

The ECB’s targeted longer-term refinancing operation (TLTRO) begins today. Under the scheme banks can borrow an amount equivalent to up to seven per cent of their balance sheet.

On top of that they will be able to borrow three times their additional net lending from 30 April to now.

“Our best guess is that banks will borrow a total of about €200bn (£159bn) in the initial TLTROs in September and December and a further €200bn in subsequent operations, leading the ECB’s balance sheet to expand by €400bn or so,” said Capital Economics’ Julian Jessop.